Channel Partners Struggle in Shift to Subscriptions

Most channel partners are shifting to subscription and recurring revenue models. However, new research shows that many are facing an uphill struggle.

Distributor Westcon-Comstor on Wednesday published “Navigating the shift: The Role Of Distributor Marketplaces In Partner Success.” The study, conducted over the last three months, is based on a survey of almost 300 channel partners in the UK and Australia.

It reports that despite a challenging environment, most channel partners have started their migration to subscriptions and services. But only 21% say that they have gone as far as possible. Most partners (78%) are only part way through the journey and facing a variety of challenges in realising full migration.

The biggest hurdle is that with the shift to subscription and recurring revenue models comes complexity. More than one-half (52%) cite the need to manage a complex multivendor portfolio as the biggest challenge they face.

Still Servicing Legacy Customer Needs

Dan Davies, CTO at UK MSP Maintel, also noted that the industry is still dealing with a lot of underlying legacy hardware.

“This means that the shift to cloud and subscription-based services has not taken place overnight. But as technology ages and our customers continue to demand more capability and flexibility, this is the journey we’re on.”

Courtesy: Westcon-Comstor

The Westcon report notes that partners still need to manage hardware, software, and services simultaneously.

“In some industries, like in the public sector in the UK for example, end customers may be slower to adapt to recurring models. So partners need to strike a balance between servicing legacy customer needs while accommodating the more progressive ones,” the report says.

However, it adds that this is no simple task to do at scale and across complex, specialised vendor portfolios.

“Complexity increases with managing enterprise solutions across multiple suppliers and is compounded by vendor acquisitions and changing solutions portfolios,” the report reads.

Problems Using Distributor Marketplaces

Westcon says partners are looking to distributors – and in particular distributor marketplaces – to help overcome these challenges. Sixty percent believe that a single platform to buy hardware and software will help accelerate this shift.

Canalys analyst Jay McBain recently said that marketplaces are growing at 86%. He said MSPs should be thinking about how to capitalize on that growth.

Those partners who use them cite self-serve stock availability (49%), online ordering (49%) and pricing (42%) as the biggest advantages. They are looking for better access to customer data (55%), market data (39%) and customer success training (46%).

Yet the research from Westcon shows less than one-half (49%) of partners are using distributor marketplaces.

Westcon-Comstor’s Patrick Aronson

“We see the B2B world evolving much as the B2C world did,” said Patrick Aronson, CMO, Westcon-Comstor. “We all know how important marketplaces, e-commerce and digital interfaces have become. Channel partners are keen to modernise and embrace the recurring revenue and subscription business model. It’s great to see the dynamic and forward-thinking partners we know reflected in this report.”

Mark Loparow is director of business growth at Australian MSP Truis.

“A distributor marketplace that can truly help us manage the complex multivendor environment we operate in would be highly beneficial. Not only for managing our complicated technology purchases, but for helping us deliver long-term business growth,” said Loparow. “Plus, our teams have different needs so breadth in capabilities is important. Simplified sales processes, self-serve capabilities, plus the data insights and information we need to achieve customer success — now that would be a game changer.”